Exploitative abuse

The setting of excessive charges or the provision of poor quality services by a business holding a dominant position can, in some cases, be prohibited by Article 82, the Competition Act 1998 and similar legislation.

How we can help

We can advise consumers and consumer interest groups on how to assess whether high prices may be abusive, and if so how to present an effective complaint to the supplier, to a competition authority or in court.

We can help competition authorities with their work on exploitative abuse cases.

We can advise businesses with a possible dominant position on the applicability of the prohibition on exploitative abuse to their business, the risks of infringement, the validity of any complaints received, and the basis on which a fair price level can be determined in practice.

We can help investors and potential investors in these companies by identifying and analysing the competition law compliance issues and risks that these companies face.

What is exploitative abuse?

An exploitative abuse can be characterised as a use of a dominant position which is illegitimate because of a direct adverse effect on the interests of customers.

This contrasts with abuse cases in which the objection is to conduct which has the object or effect of distorting competition.

EC case law is clear that conduct by a dominant firm which exploits customers can, in some cases, be prohibited by Article 82, even if it does not have an anti-competitive object or effect. What is less well understood is the exact circumstances in which the prohibition applies, and how to calculate what price is low enough (or what level of service quality is high enough) to ensure compliance with Article 82.

Faced with the practical difficulties involved in its application, some commentators and practitioners have argued that the prohibition on exploitative abuse has no place in modern competition law.

Our analysis of the case law shows that this is wrong: the prohibition on exploitative abuse, as it has been applied by the courts, rests on a reasonably clear basis. A dominant firm can find out what it needs to do in practice in order to comply.